friday, 17 june of 2016

Supreme Court Makes It Easier for Patent Holders to Win More in Damages

The Supreme Court on Monday made it easier for patent holders to win larger financial damages in court from copycats who use their inventions without permission.

The high court, in a unanimous opinion by Chief Justice John Roberts, overturned a specialized appellate court that had adopted a hard-to-meet legal standard for winning punitive damages, even in cases where the defendant’s patent infringement was willful.

The chief justice said the standard was too rigid and “excludes from discretionary punishment many of the most culpable offenders, such as the wanton and malicious pirate who intentionally infringes another’s patent…for no purpose other than to steal” the patent holder’s business.

Federal law allows trial judges to award enhanced infringement damages to patent holders that total three times the amount of actual damages in a case. The Supreme Court’s decision stressed that judges should have leeway to conclude that such damages are appropriate.

The closely watched litigation had produced a split between the Obama administration, which supported the availability of punitive damages, and some top technology companies like Facebook Inc. and Alphabet Inc.’s Google, which said strict limits on large damage awards protected innovation and deterred abusive suits alleging patent infringement.

Chief Justice Roberts acknowledged those concerns. But he said they didn’t justify the imposition of artificial limits on the ability of patent owners to receive additional money in court when someone purposely trampled on their intellectual property rights.

The chief justice said judges can strike a proper balance and prevent lawsuit abuse by awarding larger monetary damages only for “egregious cases of misconduct.” Courts shouldn’t issue punitive damages in “garden variety” cases, he said.

The ruling, which came in a pair of consolidated cases, was a win for two companies that alleged their rivals willfully copied their products.

In one, medical-device maker Stryker Corp. convinced a jury that subsidiaries of rival Zimmer Biomet Holdings Inc. willfully infringed Stryker patents on hand-held devices used to clean wounds. Jurors awarded Stryker $70 million for lost profits. The presiding judge, citing testimony that Zimmer deliberately copied Stryker’s devices, then tripled the damages award.

Stryker lost a challenge to the award at the U.S. Court of Appeals for the Federal Circuit, which ruled Zimmer shouldn’t have to pay the extra money because its legal defenses, while unsuccessful, weren’t unreasonable or entirely baseless.

The Supreme Court said that ruling was incorrect and sent the case back for further proceedings.

Stryker didn’t immediately respond to a request for comment. Zimmer said it was disappointed in the ruling but “looks forward to continuing to defend itself” when the case returns to the lower courts.

In the second case, Halo Electronics Inc., which makes components used in computers and other devices, won $1.5 million in infringement damages from Pulse Electronics Corp., but didn’t convince the Federal Circuit that enhanced damages were merited.

The high court also tossed out that Federal Circuit judgment.

The Supreme Court ruling adds to a roster of decisions in recent years that have taken aim at the Federal Circuit, which hears patent appeals from around the nation. The justices have faulted the appeals court for crafting legal precedents that stray from the language of federal patent law as written by Congress.

While Monday’s Supreme Court ruling strengthened the hand of patent holders, many of the earlier high court decisions chipped away at patent rights.

(Published by The Wall Street Journal - June 13, 2016)

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